Small Business Factoring

David Castro asked:


The biggest reason that small businesses fail is a lack of adequate cash flow. When the economy is good and sales are high, this isn’t usually a problem. However, the economy is not always strong, and sales are not always high. During these down times, the cash flow can slow, and cash reserves begin to dwindle. Or you may be enjoying the good economic times, and decide that it is time to expand your business. When this happens, you need to make sure you have a plan for obtaining small business financing.

For well established businesses with a good credit record, finding small business financing is not usually a problem. If this describes your business, you probably already have a relationship with a bank. You should be able to talk to the loan manager at your bank, and it is just a matter of structuring the financing in a way that is acceptable. If you do not already have a relationship with a local bank, it is an easy thing to do. Most banks are more than willing to work with successful businesses.

However, not all businesses are well established, and not all businesses have a solid credit history. For those businesses, obtaining small business financing can be a bit more problematic. There are, however, lenders that are willing to work with business that have struggled financially. They specialize in lending money to businesses that might not qualify for financing with a bank.

For businesses that are already operating, many lenders only require the past several months credit card transaction records as proof that the business is generating income. The lender then “buys” a portion of your credit card sales as repayment for the loan. When you take out a loan, the agreed upon portion of credit card sales will go to the lender until the loan is repaid in its entirety.

Because there are so many lenders in the small business financing industry, it is important that you do your homework. Make sure you completely understand the terms of the loan before you sign any loan agreements. Read the agreement thoroughly, and if there are any parts you do not understand, ask for clarification. It is a good practice to have your attorney or CPA examine any documents. They are trained to read legal and financial documents, and they may be able to spot any problems before the agreement goes into effect. While it is important to keep your cash flow healthy, signing a bad loan agreement can hamper your business growth for years to come.

Taking out small business financing is a normal part of business. Do not look at the need to take out a loan as a sign of bad business or failure. It is a necessary part of doing business. Sometimes it is the difference between keeping your business running during a slow time, or closing your doors before you even have a good chance to succeed. When given that choice, a loan seems like a very good idea.



For Commercial Finance Loans – Accounts Receivable Financing * Business Equipment Leasing * PO Finance * Commercial Property Mortgage – IMM Financial has been in the Commercial Finance Business serving companies just like yours for over 14 years. Put our experience to work for you. We are the Cashflow Specialists.

Chrystal King asked:


You are one of the many small business owners in the United States. And unfortunately, due to the current economic situation, you are also one of the many small business owners in the United States who do not qualify for small business loans. This has led you to ask the question, “What should I do for business financing if I can not get a small business loan?”

There are many alternative options out there, but this article will focus on the one small business financing option that was designed with merchants (owners of retail and/or service-oriented businesses) in mind; the business cash advance.

What is a Business Cash Advance?

A business cash advance is a method of business financing in which lenders utilize credit card factoring. In other words, a business cash advance lender can give you cash now, and will eventually collect the advance through your business’s daily credit card sales. Only a small percentage of those daily credit card sales will be deducted, allowing your business as much time as it needs to repay the business cash advance.

Who is Eligible to Receive a Business Cash Advance?

Most business cash advance lenders hold similar requirements. Basically, a small business owner of at least six months, who owns a retail and/or service-oriented business that processes a minimum of $5,000 in monthly credit card sales is eligible to receive a business cash advance. Other things such as the applicant’s credit score and the business’s lease are also taken into consideration. But generally, a small business owner does not have to have great or even good credit to be approved for a business cash advance.

How Much Money Can I Get with a Business Cash Advance?

Small business owners can typically receive anywhere from $5,000 to $500,000. How much money they actually receive depends on their businesses’ monthly credit card sales volume. Though there is a chance that a borrower may not qualify for an advance as large as he/she had hoped, many lenders do allow borrowers to renew their advances every three to four months, giving small business owners the opportunity to acquire the funds they need over time.

How Do Business Cash Advance Repayments Work?

Just as the amount that one can be advance is based on his/her business’s monthly credit card sales volume, repayments are also linked to a business’s credit card sales. When customers make payments with their credit cards, a small percentage from those daily sales goes toward the repayment of the business cash advance. It generally takes about six to eight months for a business cash advance to be repaid, but there are no fixed terms and, therefore, no penalties for early or late repayments.



For Commercial Finance Loans – Accounts Receivable Financing * Business Equipment Leasing * PO Finance * Commercial Property Mortgage – IMM Financial has been in the Commercial Finance Business serving companies just like yours for over 14 years. Put our experience to work for you. We are the Cashflow Specialists.